Is a Car Broker Right for You?

Nobody likes haggling with a car dealer. Now, you can hire a broker to do it for you.

BITA KLEIN DOESN'T LIKE SHOPPING for cars -; and she particularly dislikes looking around for lease deals. No matter how much research and haggling she does, she's always left with a nagging sense that she didn't get the best deal possible.

So when the 45-year-old stay-at-home mom from Westwood, Calif., decided to lease a 2005 Lexus GX 470 SUV late last year, she pulled out the big guns: She hired an auto broker to handle all the negotiations for her.

Having never used a broker before, Klein was skeptical. To make sure the quote her broker gave her was good, she headed down to her local dealership to see if it could match the price. To her surprise, the best the dealer offered would have run her an extra $83 a month, or nearly $5,000 over the lifetime of her five-year lease. Needless to say, Klein signed her broker's paperwork immediately. The process was so positive that she plans to use a broker again, when her husband's vehicle goes off lease.

Never heard of car brokers? They first began popping up in California in the late 1980s (thanks to the fax machine), and now can be found around the country. Think of them as hired negotiators. Most brokers are former car salesmen who know all the dealer tricks. For a fee, a broker will do everything from shop around for the best price to deliver the vehicle to your driveway. Good brokers more than make up for their fees, which can run as high as $400 -; and they make the process a lot easier for the buyer. Most brokers do both lease and purchase deals.

Be warned: Regulation of this industry varies widely by state. Some states require that brokers be licensed dealers, whereas others don't. (Check with your local Department of Motor Vehicles for your state's requirements.) Because regulation varies, it's impossible to know how many brokers are currently operating in the United States. That doesn't mean that these folks are disreputable, however. "It's definitely a convenient way to buy a car for someone who doesn't want to be involved in the process," says Mike Hudson, an automotive expert with Edmunds.com. But it does mean you need to do some digging to find one you trust. And before agreeing on a car deal, you should do a little reconnaissance to make sure the price is indeed right.

What to watch out for? Shady practices like "double dipping," in which a broker gets paid an undisclosed commission from a dealership. This can add $500 to $1,000 to the price of a vehicle, says Linda Goldberg, president of CarQ, a Terra Linda, Calif.-based auto broker. The dealer could, for example, pad the interest rate on your auto loan and give a quarter- or half-point of it to the broker, or keep some of the manufacturer rebate for himself. Fortunately some brokers like Goldberg refuse all dealer commissions.

You should also be aware that, yes, with a little determination, you could probably do just as well on your own. Thanks to the Web, you can now research everything from invoice prices to dealer incentives. In fact, an increasing number of Americans are now buying their cars online these days.

But just because you could do better on your own doesn't mean you have the time or desire to do so. For some, buying a car can be intimidating. So if you're short on time or break out into hives just thinking about roaming a new car lot, using an auto broker could be for you. Here's how to find a good one.

Hold Off Until You're Really Ready Buying a vehicle through a broker is a very quick process, and there's no going back once the brand new vehicle is sitting in your driveway. So don't call the broker until you're ready to make your purchase. That means you need to do all your research, including taking a car out for a test drive, before you pick up the phone. You should even know the color and accessories you want.

It's also a good idea to line up independent financing before you start the buying process. (Read our story for some helpful hints.) This way, you can tell the broker you're already preapproved for a loan with an interest rate of, say, 5%. This might encourage him or her to shop around for an even better financing deal for you. Pick Your Broker Carefully How to find a good broker? Ask around. If you don't know anyone who has used a broker, consider contacting your local dealer association or the National Automobile Dealers Association for a recommendation, suggests Jon Quade, an automotive expert and former car salesman. Since a dealer ultimately gets the sale, these folks have no problem passing along the names of people who can help facilitate a transaction.

As a last resort, you can always open up your local yellow pages or search online. But know that some dealers have set up Web sites pretending to be brokers just to funnel more customers to their showrooms, says Edmunds.com's Hudson. A quick check for complaints with your local Better Business Bureau is a good precaution.

Do Some Research Even though you're paying for convenience, it's still a good idea to check prices online. At automotive sites such as CarsDirect.com or Edmunds.com, you can look up invoice prices (wholesale), MSRP (retail) and incentive programs. Edmunds.com will even provide you with the average prices that customers in your area are paying for certain vehicles. They call this their True Market Value (TMV). For $12, you can purchase wholesale vehicle pricing information from Consumer Reports.

Once you've done your research, you'll be able to eyeball whether your broker got you a good deal or not. If the quote comes back too high, tell him or her to try again or get lost. Edmunds.com's Hudson points out that your broker should be able to come in significantly below the Edmunds.com TMV price. Otherwise, what's the point of hiring a pro?

Get Everything in Writing Once you have a deal you like, make sure to get it all in print. Your paperwork should include the price of the vehicle as well as all taxes and fees. It's also a good idea to get the vehicle identification number (VIN) so you know that the car you bought will be the one delivered.